While that pretty much makes it the go-to mapping service on phones, the search giant did not score as high when it came to providing other travel services, such as information about flights and reviews.

Those categories, which people typically find handy to access while on vacation, were dominated by other providers, according to a study conducted by Nielsen, which tracked usage data from 5,000 U.S. smartphone owners.

Nielsen said when it came to other services, consumers were more likely to visit single-purpose apps, such as GasBuddy, Urbanspoon, TripAdvisor or Expedia.

Even though the study was limited to mobile behaviors, the findings suggest the exact opposite of what some feared just months ago — that Google would dominate flight bookings and local search after spending big bucks to acquire ITA Software, the airline data company, and, to a lesser extent, Zagat, the reviews company.

The U.S. Department of Justice ultimately gave Google permission to acquire ITA for $700 million, but the search giant had to agree to a set of concessions designed to minimize the impact to competition.

Google continues to integrate the data it has acquired, so it is still too early to make any final judgments about the potential impact it could have. But if it can successfully leverage its mapping services, it will obviously have a powerful launching pad to reach millions of customers for other services.

For example, in June, 77.8 million U.S. smartphone owners used Google’s maps applications across both Android and iPhone. The second-most popular app was GasBuddy, which attracted 8.9 million users looking for the nearest gas station offering the lowest prices. The third most popular app was also a Google mapping property called Street View, which is available on Android. However, the only content application to make it was IAC-owned Urbanspoon, which provides recommendations for nearby restaurants — similar to Google-owned Zagat.

Nielsen also broke out the most used travel sites. The list provided a much wider variety of services, maybe because people are more likely to need the information at least once, but don’t need ongoing access to the application for future reference. Again, Google Maps was dominant, but many other service providers made the rankings.

Here’s that list:

“In terms of the IPO, no,” Hafner said in an interview with AllThingsD, after ringing the Nasdaq opening bell. “It went exactly like I wanted it to.”

Kayak originally filed to go public nearly 21 months ago, and while it kept its registration up to date, the company put the offering off due to a poor economy and direct influences in the travel industry.

“Google purchased ITA Software and that caused some consternation, but now that they’ve been in the market for 18 months, you can see for yourself our financial results,” Hafner said. “There were never any starts and stops with the IPO. When we thought the time was right and the story would be well-received, we were ready, and that day was today.”

While waiting for the right window, Kayak was indeed able to disclose strong operating results, including four consecutive quarters of profitable growth.

In the first quarter of 2012, it reported a profit of $8.1 million, reversing a loss of $12 million in the same period a year earlier. (The loss was mostly attributable to a $15 million impairment charge related to the discontinuation of the SideStep brand name.) Revenue in the first quarter totaled $73.3 million, compared to $52.7 million a year earlier.

In the offering, the online travel company raised $100 million after selling 3.5 million shares for $26 apiece. The shares priced slightly above the $22 to $25 range that Kayak disclosed last week. In early trading this morning, the stock climbed higher by $6.68, or roughly 26 percent, to $32.68. UPDATE: At the end of the regular session, Kayak’s stock was up nearly 28 percent, or $7.18 a share, to close at $33.18.

Both Hafner and the company’s co-founder and CTO Paul English (pictured right and left, respectively), said now that the offering has been completed, they are eager to get back to work.

On deck, English said, is a continued focus on the mobile sector. To date, Kayak’s applications have been downloaded 17 million times, but English sees it as a big opportunity, unlike Facebook, which is having a hard time monetizing as its user base shifts to phones and tablets.

“Our view on mobile is very different than Facebook,” he said. “Kayak is an e-commerce site, and whether they have a vacation coming up or a business trip, they need to make a purchase and they are increasingly making purchases on the phone, or sometimes in combination on the phone and the Web. We don’t really care what platform they use, but they are using [mobile] a lot.”

Later this afternoon, Kayak is planning to sell 3.5 million shares at $22 to $25 each, to raise as much as $100 million, according to its latest document filed with the Securities and Exchange Commission.

But based on strong demand, the company could end up pricing its shares even higher, reports CNBC.

At the top of its current range, the company would be valued at nearly $1 billion.

Starting tomorrow, the online travel company will trade under the ticker symbol KYAK on the Nasdaq exchange.

Since the company first filed to go public last year, a lot has happened, making it difficult to gauge how it will be received by investors.

Across the broader technology sector, several tech companies have gone public in recent months, some faring better than others, like LinkedIn and Yelp versus Zynga and Groupon.

In the online travel business specifically, several big moves could value the company higher.

Google acquired ITA Software for $700 million to add travel airline information to its search results, and TripAdvisor spun off from Expedia to create two separately traded companies. Since then, both are trading at almost $48 a share, up from $27 at the time of the split.

As for Kayak, the wait also gave it the time to report four consecutive quarters of profitable growth.

In the first quarter, it reported a profit of $8.1 million, reversing a loss of $12 million in the same period a year earlier. (The loss was mostly attributable to a $15 million impairment charge related to the discontinuation of the SideStep brand name.) Revenue in the first quarter totaled $73.3 million, compared to $52.7 million a year earlier.

In Kayak’s online road show video, the company stressed that it’s not just another online travel agency, but a technology company. It believes it can out-innovate many other companies, because it isn’t busy managing call centers or flying planes.

But as a customer-facing service, why doesn’t it need call centers?

Kayak CTO and co-founder Paul English explained that customer inquiries are handled by engineers, connecting a very close bond between what they are creating and what the customers are saying about it. The complaints aren’t considered resolved until the bug is fixed on the site.

Maybe now that the company is going public, that’s how Kayak will take calls from shareholders, too?

Shares of the New York-based company gained $6 to close at $27.06 today after Reuters reported that the company was in the process of hiring a financial adviser after it received takeover interest from private equity firms.

Travelzoo spokeswoman Lisa Moore declined to comment on whether the company was for sale.

Travelzoo is one of the pioneers in the daily deals business. For more than a decade, it has been sending subscribers a weekly email highlighting what it calls the top 20 travel deals.

A list of obvious acquirers for Travelzoo includes Google, which famously failed to buy Groupon for $6 billion. More recently, Google bought travel company ITA Software. Amazon could also be interested as it pushes AmazonLocal, its daily deals business; however, it already owns a percentage of LivingSocial, the second-largest deals company after Groupon.

A host of other companies could also take a look at the deal, including its travel competitors, such as Expedia or Priceline, or several international providers.

Unlike Groupon, which takes a cut of the revenue when a deal is sold, Travelzoo uses an advertising model where companies pay a fee to get in front of its large email audience. More recently, the company shifted gears to enter the local deals space, offering discounts on restaurants and other local services. In those deals, it charges the merchant a percentage of each transaction.

Today, the company’s market value hovers around $300 million, falling way short of Groupon’s $9 billion valuation and making it a prime acquisition target.

The company’s main assets are its sales team and its list of subscribers, but generally, it is not known as a technology leader. The company’s Web site is still fairly basic with a red, white and blue theme and has very few pictures, which the company says is on purpose. Before any acquisition closes, the potential acquirer would want to know how much the two companies’ subscriber bases overlapped.

In 2011, the company reported revenues of $148 million, up from $112 million over the same period during the previous year.

During the Norwalk, Conn.-based company’s third-quarter conference call today, it fielded questions about the impact of Google adding airfare and hotel information to its search results through its acquisition of ITA Software.

Priceline CEO Jeffery Boyd said that, so far, it looks like Google has created “platforms that can be operated as an efficient vehicle for advertisers to get qualified leads.” He added that his company’s approach is “as an advertiser, and to participate as effectively as we can.”

Some companies, including Kayak and Expedia, worried about Google’s market power if it was able to acquire ITA. But Priceline did not object, Boyd said.

“The transaction was approved and we think it’s incumbent upon our industry to find the best ways to integrate and advertise on it, and try to get the wealth of qualified customers that Google is trying to drive toward us,” he said.

The downside: If Google is able to send more qualified leads, it might be able to charge advertisers more.

Priceline beat analyst expectations in the third quarter. Revenue grew 45 percent, to $1.4 billion; net income doubled to $469.5 million, or $9.17 a share, compared to the year-ago period.

Think about the federal government’s blocking of the $39 billion AT&T and T-Mobile merger and you might want to reread Google’s blog today, penned in reaction to the news that the Justice Department is making a second request for information about its $12.5 billion acquisition of Motorola Mobility.

“This is pretty routine,” wrote Google’s Motorola integration exec Dennis Woodside. “We’ve gotten these kind of requests before.”

Maybe Google has (and it has with other purchases) — but in actuality, only four percent of transactions got such a follow-up request from regulators.

To be fair, it is much more common in high-profile, big-money deals like this one, but it means a longer closing period and more uncertainty around the Android mobile ecosystem until it’s done.

Still, Google has good reason to be patient. Despite tough criticism and brutal lobbying, it won approval from Justice for its $700 million deal to buy flight data service ITA Software in April, after nine months of scrutiny and a number of conditions imposed.

And the search giant waited out an intense six-month Federal Trade Commission approval process last year for its $750 million acquisition of mobile advertising start-up AdMob. It had an even harder time with the FTC’s nod of its 2007 DoubleClick purchase for $3.1 billion.

One that it lost — an obvious bridge too far that I dubbed Yahoogle — was Google’s 2008 effort to meld a troubling partnership with Yahoo in search advertising.

So, we’ll see soon enough which way D.C. — which just had Google Executive Chairman Eric Schmidt up to the Senate for an antitrust hearing chit-chat — will go.

Until then, here’s Woodside’s whole blog:

An update on our Motorola acquisition

Wednesday, September 28, 2011 at 5:30 PM ET

Posted by Dennis Woodside, SVP Google

Since we announced our plans to acquire Motorola Mobility, we’ve been excited about the positive reaction to the proposed deal — particularly from our partners who have told us that they’re enthusiastic about our defense of the Android ecosystem.

And as David Drummond said when we announced our plans in August, we’re confident that this deal will be approved. We believe very strongly this is a pro-competitive transaction that is good for Motorola Mobility, good for consumers, and good for our partners.

That said, we know that close scrutiny is part of the process and we’ve been talking to the U.S. Department of Justice over the past few weeks. Today we received what is called a “second request,” which means that the DOJ is asking for more information so that they can continue to review the deal. (This is pretty routine; we’ve gotten these kind of requests before.)

While this means we won’t be closing right away, we’re confident that the DOJ will conclude that the rapidly growing mobile ecosystem will remain highly competitive after this deal closes. We’ll be working closely and cooperatively with them as they continue their review.

Kayak has updated its IPO filing to disclose that Google has entered the travel search market.

The Internet giant’s entry, which could become a formidable force in the industry, was entirely expected after its $700 million acquisition of ITA Software closed in April. (As evidenced by today’s Senate subcommittee hearing, Google’s clout across various businesses is a hot topic right now).

Last week, Google unveiled its very first steps into the space, which include flight results from general search inquiries.

From Kayak’s amended S-1:

“Google’s flight search offering appears to include significantly increased speed on return of search results and, in the future, may include other enhancements or improvements in performance of the ITA software which may not be made available to us.”

Separately, Kayak disclosed two figures that reveal just how important Google is as a partner.

In the first six months ended June 30, 6.5 percent of its total revenues came from Google and 5 percent of its user queries resulted from searches entered on general search engine Web sites, like Google.

Whether Google’s entry into the market will affect Kayak’s ability to go public is unclear. However, the Norwalk, Conn.-based company, has already lowered the likelihood of an IPO since filing 11 months ago.

Kayak calculated the “various uncertainties” surrounding its IPO as part of determining the worth of its stock grants. As of April, it reported that the likelihood of its IPO decreased to 50 percent. Meanwhile, the chances of a strategic sale or remaining as a private company increased to 20 percent and 30 percent, respectively.

“How cool would it be if you could type ‘flights to somewhere sunny for under $500 in May’ into Google and get not just a set of links but also flight times, fares and a link to sites where you can actually buy tickets quickly and easily?”

That was Google’s exact wording for explaining why it wanted to buy ITA Software for $700 million. And, after nine grueling months of antitrust review–and agreeing to a number of severe conditions–the Justice department approved the merger.

On Monday, Kayak didn’t let the opportunity pass by to poke fun at its biggest new competitor. In a blog post, complete with a smiley-face emoticon at the end of the sentence, Kayak wrote: “Great idea, Google. Glad we thought of it…like a year ago.”

Kayak’s service–found at Kayak.com/explore–lets users enter a starting location, a month they’d like to travel, and any stipulations (such as budget) or activities (such as a beach or golf destination).

So, to answer Google’s question, Kayak found a nice $430 flight to Hawaii in May that Google’s Mountain View executives could take from the nearby San Jose airport.

(Of course, Kayak acts tough now. Never mind that it was one of the leading companies opposing the acquisition mere months ago, and is still waiting in the wings for the right moment to go public.)

After roughly nine months of antitrust scrutiny, the justice department has approved Google’s acquisition of ITA, acting quickly before the government faces a potentially shutdown due to budget disputes. And, not surprisingly, all parties involved are claiming victory.

Google announced an agreement to acquire ITA Software, a Cambridge, Massachusetts flight information software company, for $700 million in July 2010.

The acquisition was immediately identified as a threat to companies, such as Kayak and Orbitz, which rely on ITA’s data. Likewise, the federal regulators took the opportunity to take a close look at the deal’s ability to fuel Google’s continuing search dominance. However, the deal was largely expected to be rubber stamped because it represented a vertical expansion for Google, and not a gain in general market share.

The concessions laid out by the Department of Justice today has calmed the nerves of the deal’s harshest critics.

“This is a clear win from our perspective,” said Tom Barnett, counsel to Expedia, and former head of the Antitrust Division of the U.S. Justice Department during a call organized by FairSearch.org, an advocacy group that opposed the acquisition. “We are very happy about that, but we are also aware of the fact that this is one transaction in one section of the Internet. We do think that it’s important that people bare that in mind and remain vigilant.”

The two biggest concerns by ITA’s customers was that the company’s data would remain available to them and that Google would not have access to their proprietary data.

Under the terms of the agreement, the department will require Google to establish internal firewall procedures to ensure competitors’ intellectual property and that ITA’s customers will be able to extend their contracts into 2016. New customers are also ensured that they will be able to license ITA’s software on “fair, reasonable and non-discriminatory terms” into 2016. What’s more, the proposed settlement provides for a formal reporting mechanism for complainants if Google acts in an unfair manner.

On the same call, Kayak’s Chief Marketing Officer Robert Birge, said that Google’s likely happy with the terms because it got what it ultimately wanted — to acquire ITA. But that doesn’t mean that the terms weren’t vigilant enough to make customers of ITA happy, too.

“Their deal got cleared, so of course they are going to spin it how they like, but the Justice department has taken action to ensure competition. We are still looking at the specific details, but from a cursory look, it’s clear they protected our access and have protected our own proprietary technology that we’ve developed over the past seven years. It’s unambiguous to us that this is pleasing to us.”

We’re sure the deal’s closure after nine months also is pleasing to ITA’s investor list.

As soon as the court accepts the Justice Department’s proposal, you can imagine the $700 millions being distributed to all parties involved. In 2006, ITA closed $100 million in equity investment. Its investor list includes: Sequoia Capital, Battery Ventures, General Catalyst Partners, PAR Investment Partners and Spectrum Equity Investors.

In a short statement by Google, Jeff Huber, Google’s SVP of Commerce and Local, was enthusiastic about the Justice Department’s actions: “We’re moving to close this acquisition as soon as possible, and then we’ll start the important work of bringing our teams and products together. We’re confident that by combining ITA’s expertise with Google’s technology we’ll be able to develop exciting new flight search tools for all our users. Up, up and away!”

This doesn’t mean that Google is entirely in the clear.

As Digital Daily’s John Paczkowski wrote earlier this week, Larry Page has a lot to look forward to as his tenure as CEO, such as a European probe of the company’s search and advertising operations, a Texas investigation into allegations of “manual overriding or altering of” search result rankings, and perhaps that long-in-the-works Federal Trade Commission probe.

One would be a travel agency, focused on selling air, hotel and car rentals and the other would be TripAdvisor, the travel reviews site that operates in 27 countries and 19 languages.

The split-up was a surprise today, many brows furrowed as to the significance of the timing, since the travel industry is facing a number of major disruptions.

Today, reports said Google and the Justice Department could ink a deal over the next couple of days that would allow the search giant to purchase flight-data company ITA Software for $700 million. One of its biggest partners, Kayak.com, is also zeroing on its IPO. Kayak is also beginning to book hotel rooms directly with its customers, rather than always redirecting to other sites, such as Expedia.

But much of the thought process has to do with what Expedia thinks its business is worth, compared to Wall Street’s valuation.

While Expedia’s travel agency business garners the most attention, it is TripAdvisor that has the bigger growth story, but in many respects is hampered by being tucked under Expedia’s  much larger wings.

Expedia CEO Dara Khosrowshahi told the WSJ that TripAdvisor is now big enough to be on its own. “It is a matter of size, globalization and diversification of revenues…It is really ready to stand on its own.”

On its own, it could be worth as much as $4 billion, according to some estimates, which is way above the $237 million Expedia purchased it for in 2004.

TripAdvisor makes money from advertising as well as from affiliate fees when users book through other sites, such as Priceline or Orbitz. TripAdvisor is the high-growth and high-margin business of Expedia today.

In 2010, TripAdvisor’s revenues totaled $486 million, up 38 percent compared to the year-ago period. Operating income in 2010 totaled $260 million, increasing 33 percent year over year. Its margins are slightly above 50 percent. Contrast that to Expedia’s overall transaction business, which is much larger, but is seeing a more modest annual growth at 20 percent.

But a lot of that growth story is not as easy to see on the surface.

Meanwhile, one of Expedia’s largest competitors, Priceline, continues to be appreciated in the public markets. Its stock hit a recent 52-week high after one analyst boosted its price target to $610 from $575.

In after hours trading yesterday, Expedia shares jumped 14 percent to $25.51 after closing $22.40 in the regular session. Today, Citi Investment reiterated its Buy rating at a $29 price point and called it a value play.

Not all analysts believe the break-up is the right thing to do.

Fitch Ratings, which is watching closely to see how the plan will affect the company’s bond ratings, wrote that TripAdvisor as a stand-alone entity will likely represent a significant new competitor to Expedia. It believes that TripAdvisor will now have much more flexibility to pursue a model that’s similar to competitors such as Kayak, which can promote hotel direct bookings in favor of directing traffic to online travel agencies, such as Expedia.

That is a particular concern because a large majority of Expedia’s revenue comes from hotel bookings, which has higher margins than airplane tickets.

Though it isn’t finalized, the proposed agreement would allow some government antitrust monitoring of its operations for the first time, potentially setting a benchmark for any future acquisitions by Google.

The settlement with the Justice Department over ITA could be just days away, the people familiar with the matter said, though the possible government shutdown at the end of this week might delay a final resolution.

Read the rest of this post on the original site »

A new feature called “Price Predictor” auto-suggests flights and prices right from the search box, according to a Bing blog post today.

As soon as you start typing “Seattle to JFK,” a menu drops down, telling you the best price, and if you should buy now because prices are going up, or if you can hold off for a better fare.

The menu drops down before you ever hit the enter key. The results are for the best flight price over the next 90 days.

Other key words that will trigger the menu include: “Fly to Chicago,” or even “Chicago Flights.” Bing will immediately recognize where you are and instantaneously display the “Price Predictor” based on your location.

To cull this price information, Bing uses ITA Software’s data.

Google is currently in the process of trying to acquire ITA for $700 million, a process that is now being reviewed by the Justice Department for its antitrust ramifications.

ITA Software maintains a database of flight information, including fare comparisons and flight schedules for many major U.S. airlines, including American and United Airlines. Companies such as Microsoft and Kayak.com, which use the data, are opposing the merger because they claim it will stifle competition.

Others, such as Expedia.com, are also opposed to the deal even though they do not rely on data from ITA. The American Antitrust Institute also recently spoke out against it, calling it a “unregulatable monopoly.”

There are two main issues. First, the companies that do rely on the data are concerned Google will not honor its contracts over the long-term, and second, they are afraid Google might become a competitor, even though it promises not to get into the business of selling tickets.

For now, Google is not even licensing data from ITA.

When conducting a similar search of “Seattle to JFK” on Google, there’s no helpful information in the drop down menu. When you hit enter, there’s a widget that lets you choose dates for your travel and where you want results from, such as Expedia, Travelocity, Priceline, Kayak and others.

But unlike Bing, there are no instant results on the best prices anywhere.

In a FAQ on Google’s site about the merger, it writes: “By combining ITA Software’s expertise with Google’s technology, we will be able to build new flight search tools for users that will make it easier for them to search for flights, compare flight options and prices, and get them quickly to sites where they can buy their tickets.”

In another significant search announcement yesterday, Google said it was revising its algorithm to target makers of low-quality content.

The search giant has been criticized by many of late for the presence of too much spam in its results, which degrades the consumer experience on the powerful site.

Thus, “pretty big algorithmic improvement to our ranking–a change that noticeably impacts 11.8% of our queries,” said Google in a blog post.

The company continued:

“This update is designed to reduce rankings for low-quality site–sites which are low-value add for users, copy content from other websites or sites that are just not very useful. At the same time, it will provide better rankings for high-quality sites—sites with original content and information such as research, in-depth reports, thoughtful analysis and so on.”

Who Google is aiming at is unclear–some point to Demand Media, whose top exec recently said the content company welcomed any improvements to the search results in its recent quarterly call.

“We consider ourself very white hat,” declared CEO Richard Rosenblatt, who has often touted the Demand’s good relations with Google, to a question from a Wall Street analyst about the series of recent declarations by Google to clean up its search results.

That was further underscored yesterday.

Interestingly, the Google post about the changes, titled “Finding More High-Quality Sites,” was authored by Google’s Amit Singhal and Matt Cutts–who have cut a high profile of late in the search arena.

Both Singhal and Cutts were quite vocal recently in loopy accusations about Microsoft’s Bing lifting Google’s search results.

And Cutts has been a frequent visitor to Washington, D.C. of late, to defend Google over its controversial acquisition of the ITA Software flight information company, as well as its search ranking process.

At a January 13 meeting, in an email obtained by BoomTown, Cutts was the draw:

Please join us!

You’re invited to learn

How Google’s Search Engine Works

Myth-busting and Q&A for House/Senate staff members

with

Matt Cutts

Principal Search Engineer, Google

Thursday, January 13, 2011

2:30 – 3:30 PM

House Visitor Center Room 201

How does Google’s search engine really work? Can websites pay Google to improve their ranking in Google results? What’s the difference between the “natural” results and the ads on the right hand side? And why does a particular website rank #1 or #3 when you do a Google search for your boss’ name? You’re invited to join Matt Cutts, one of Google’s top search engine engineers and the company’s ambassador to webmasters for a session on Capitol Hill where Matt will explain how Google ranks websites, address common myths about Google’s search results, and answer your questions. Please join us!

In another invite, low-quality content was the topic:

Matt Cutts is one of Google’s top search engineers who heads up the team ensuring that spam and low-quality sites don’t game search results. He is going to be here in DC to talk with folks around town about some of the recent calls for government to police or regulate the “fairness” of search results. Matt is a bit of a rock star in the search world and spends a lot of time speaking and blogging about these issues. Basically he’ll talk about how Google goes about ranking websites, how his team fights webspam, and he’ll provide a closer look at sites like Foundem and MyTriggers (who have filed antitrust actions against Google).

Finally, he’ll talk about the recent calls by some for Google’s search results to be regulated.

Perhaps I’m being cynical, but the noisy search algorithm changes, while welcome to those using Google, also have a pretty clear goal to burnish the Silicon Valley company’s image.

Please see this disclosure related to me and Google.

ITA Software maintains a database of flight information, including fare comparison and flight schedules, for many major U.S. airlines, including American and United Airlines. Companies such as Kayak.com and Expedia.com are opposing the merger because they claim it will stifle competition.

Google maintains that it is only trying to improve travel-related search since it is among its highest-volume queries. Its goal will be to refer people quickly to a site where they can actually purchase flights–and it doesn’t have plans to sell flights itself, according to a site that answers questions about the deal.

But the American Antitrust Institute’s concerns are more complex than whether Google is buying ITA to compete with online travel agencies.

It says the merger warrants a deep look because a deal of this nature will strain the boundaries of antitrust analysis and raise First Amendment questions as the government participates in decisions about the prioritization of information reaching the public.

In a release today, the non-profit explains: “Maintaining competitive markets for both general and niche search may be the only alternative, ultimately, to an unregulatable monopoly. It is therefore appropriate for the Division, employing a statute intended to stop monopoly in its incipiency, to work within a public vision of longer-term developments and to place the present acquisition within such a context.”

It’s not the first group to come out against the deal. FairSearch.org has been particularly active, and Missouri Attorney General Chris Koster, who chairs the antitrust committee of the National Association of Attorneys General, questions whether the deal would hamper competition in the online travel market.

FairSearch.org produced this video to explain why a merger should not take place:

Google Buys ITA – A Travel Story from FairSearch.org on Vimeo.

And here’s a video from Google:

Bloomberg reported today that agency staffers are preparing documents for use in a possible case against Google, but a decision on whether or not to bring a case hasn’t been made. Google–clearly eager to get the deal closed, as it has been six months since it first moved to acquire ITA in July–invoked a federal law that gives the government 30 days to rule thumbs up or thumbs down.

Since then numerous companies, as varied as Microsoft, Expedia and Travelocity, have opposed the deal and formed a coalition called Fairsearch.org to air concerns that Google could stop other companies that depend on ITA’s technology from using it, though Google has said it will continue to offer licenses after the deal closes. Orbitz Worldwide supports is neutral on the deal.

According to sources close to the situation, Google has offered $5.3 billion for Groupon, in what would be its largest acquisition yet, if completed.

Sources said the deal for the Chicago-based social buying site seems likely to be struck, even as early as tomorrow, although it certainly could fall apart right up to the end.

But, if done, it will move the search giant instantly to the top spot in local commerce online and give it huge troves of data about consumer buying habits and merchant information across the globe.

Combined with its pending $700 million acquisition of ITA Software, the travel data firm, that should freak out regulators worldwide and could be considered Google’s own version of a jobs plan for antitrust lawyers.

That said, it is a killer move for Google–despite the high price–given it has long tried to enter the local advertising space, with decidedly mixed results.

With its more than $33 billion in cash and strong stock, it had previously tried to buy local reviews site Yelp, in a deal that fell apart for reasons that are still unclear.

In contrast, Groupon, founded in 2008, has taken off like a Roman candle and dominates the huge market for social shopping and discounting.

While the $6 billion Google is considering paying seems high, Groupon’s fast-growing revenue and profitability make its multiples less daunting, said those familiar with the matter.

It will certainly be a big payoff for Groupon’s investors, including Silicon Valley’s Accel Partners, as well as Battery Ventures, New Enterprise Associates and Russia’s DST Global.

Groupon has gleaned about $170 million in venture funding from them, most of which it has not needed.

That’s because it has reportedly attracted upward of $50 million in monthly revenue.

It has done this by offering “daily deals”–getting a massive discount from local retailers in return for delivering customers via marketing via email and on social networks, especially Facebook and Twitter.

Typically, local merchants rely on less effective newspaper circulars or paper couponing.

In what will certainly be one of the deal’s ironies, Google could own a start-up that is largely powered by rival Facebook’s massive skein of social networking connections.

Facebook, of course, recently introduced its own Facebook Deals offering.

BoomTown first wrote about the deal discussions between Groupon and Google two weeks ago, noting the price would be well above the $2 billion to $3 billion offered by Yahoo.

That interest from Yahoo, which was first to sniff around the fast-growing social buying site, was first reported here too–mostly because I apparently like to stalk Groupon CEO and Justin Bieber lookalike Andrew Mason.

(And I will personally be fascinated to see how he’ll mesh with Marissa Mayer, the former search experience head who is now leading local for Google.)

The New York Times–which does not ever seem able to give credit, as All Things Digital and other blogs always do happily and without fuss–is also reporting a $6 billion price tag for Groupon.

While we all await the outcome of this potential blockbuster of a deal, here is a video interview I did with Mason this summer in Vancouver, where I asked him specifically about Google’s interest (actually, I suggested he mug Google co-founder Larry Page for dough).

Note the Bieber haircut:

Please see this disclosure related to me and Google.

]]> http://allthingsd.com/20101129/googles-groupon-offer-5-3-billion-with-700-million-earnout/feed/ 30 http://allthingsd.com/20101129/if-google-buys-groupon-itll-be-a-windfall-for-investors-bankers-and-regulators/ http://allthingsd.com/20101129/if-google-buys-groupon-itll-be-a-windfall-for-investors-bankers-and-regulators/#comments Mon, 29 Nov 2010 13:33:39 +0000 Kara Swisher http://kara.allthingsd.com/?p=37734

If Google does manage to close the deal to buy Groupon–acquisition discussions flagged by BoomTown 10 days ago–it will be at a cost that is likely to be much more than the $2.5 billion price tag being floated in the latest batch of rumors.

It’s not just that the deal will likely come in at a higher number–upwards of $3 billion, according to sources I have spoken to–which will mean a big payoff for Silicon Valley’s Accel Partners, Boston’s Battery Ventures and Russia’s DST Global.

Or that this deal will net New York bankers used on each side–Allen & Co. for Groupon and Morgan Stanley for Google–sizable fees.

It’s because as soon as it purchases the social group buying phenom, the search giant will be buying a whole lot of pricey regulatory scrutiny too.

That cost will be, many think, much deserved and will definitely not come at any discount, given the rising worries in Washington about the swaggering power of Google.

After ever-testier brushes with federal regulators–including over an overreaching attempt to join with Yahoo in search and online access to copyrighted books–Google narrowly missed getting approval for its $750 million purchase of mobile advertising start-up AdMob.

That deal was only saved after Apple made enough noise in the same space to take the focus off the controversy.

And let’s not forget Google suing the feds earlier this month over being excluded from competitive bidding to provide email and collaboration technology to the Interior Department’s 88,000 employees.

More seriously, Google has come under fire recently from numerous critics for its proposed purchase of huge flight data firm ITA Software for $700 million.

Those opposed to the acquisition, on antitrust grounds, contend that Google would control travel search in a way that would inevitably invite abuse.

The government, of course, is looking over the whole deal now.

Having Groupon in its arsenal would garner Google even more powerful pricing information from both customers and merchants across the globe.

That would in the lucrative local commerce arena. Currently, despite a plethora of clones, Groupon dominates socially fueled couponing across cities worldwide.

Owning the hot space around local purchasing and consumer information, combined with the social element, would be a tasty treat for Google.

The Silicon Valley search giant has struggled to deliver social tools to users, even as Facebook has morphed into a potent rival.

Google had looked at social reviews site Yelp for purchase previously, but that deal fell apart.

It has been introducing its own various local advertising and commerce efforts, which would be instantly turbocharged given Groupon’s much quicker progress.

In April, Groupon garnered a valuation of well above $1 billion in a massive venture funding.

It has used that money to buy up companies in the U.S. and internationally, trying to solidify itself as the major player in the marketplace.

If Google were to complete a deal to buy Groupon, it would have echoes of its purchase of YouTube in 2006 for $1.6 billion.

Many felt it a high price at the time, but it looks cheap now given how the site almost completely dominates Web video.

If that deal were to be struck today, of course, it is unlikely regulators would allow such a purchase to sail through the approval process so easily.

Thus, it will be interesting to see how they will react to a possible hook-up with Groupon, which–in many ways–is perhaps the most aggressive of Google’s moves to date to own valuable data up and down the food chain.

And, like I said, this particular move to buy discounting online could be one of its costliest too, in more ways than one.

Please see this disclosure related to me and Google.

]]> http://allthingsd.com/20101129/if-google-buys-groupon-itll-be-a-windfall-for-investors-bankers-and-regulators/feed/ 6 http://allthingsd.com/20101119/google-turns-its-local-eyes-to-groupon-but-who-else-could-enter-bidding/ http://allthingsd.com/20101119/google-turns-its-local-eyes-to-groupon-but-who-else-could-enter-bidding/#comments Fri, 19 Nov 2010 08:38:06 +0000 Kara Swisher http://kara.allthingsd.com/?p=37521

According to multiple sources close to the situation, Google is in discussions with local deals powerhouse Groupon about buying it.

Without making the requisite joke about the deal of the day, sources said the price being considered is certainly no discount–well above the $2 billion to $3 billion that Yahoo offered Groupon in acquisition talks that took place earlier this year.

But sources cautioned that the talks are not complete, and could also end up without any result, as the Yahoo discussions did.

In an email, a Google spokesperson said with some style: “Per usual, we don’t comment on rumor or speculation. If we did we’d be busy 24/7!”

A Groupon spokesperson was also sassy, noting: “Thanks for the heads-up!”

Still, the company appears to be engaged in a pattern of shopping itself around, via its bankers Allen & Co., even though Groupon investors have expressed a desire to stay independent many times.

But could there be other interested parties poking around, given the explosive revenue growth of Groupon–whose revenues are reportedly upward of $50 million a month–in the huge local retail market?

Sources said only three could pay such a high price: Microsoft, Amazon and, perhaps the most logical buyer, eBay.

Facebook is another company that could be interested, of course, although this would be a sizable purchase in both cost and also staff for the social networking giant, which has fewer employees than Groupon.

As does Google, all–except perhaps Facebook, which is not public yet–have more than enough cash reserves, as well as stock, to pay up for one of the more promising start-ups in a lucrative arena.

That would be local commerce. Currently, despite a plethora of clones, Groupon dominates socially fueled couponing across cities globally.

Owning the hot space around local purchasing and consumer information, combined with the social element, would be a tasty treat for Google.

The Silicon Valley search giant has struggled to deliver social tools to users, even as Facebook has morphed into a potent rival.

Google had looked at social reviews site Yelp for purchase previously, but that deal fell apart.

It has been introducing various local advertising and commerce efforts, efforts that would be turbocharged given Groupon’s quick progress.

In April, Groupon garnered a valuation of well above $1 billion in a massive venture funding.

It has used that money to buy up companies in the U.S. and internationally, trying to solidify itself as the major player in the marketplace.

If Google were to complete a deal to buy Groupon, it would have echoes of its purchase of YouTube in 2006 for $1.6 billion.

Many felt it a high price at the time, but it looks cheap today given how the site almost completely dominates Web video.

A purchase this size would also likely require bankers. Google’s favored one is Morgan Stanley.

But there is one major issue in a possible Google purchase of Groupon: Even more regulatory scrutiny by the federal government over its power online.

Google narrowly missed getting approval for its $750 million purchase of mobile advertising start-up AdMob.

And it is currently under fire from numerous critics for its proposed purchase of huge flight data firm ITA Software for $700 million.

Those opposed to the acquisition, on antitrust grounds, contend that Google would control travel search in a way that would invite abuse.

Having Groupon would garner Google even more powerful pricing information from both customers and merchants across the globe.

Stay tuned, but check out this video interview I did with Groupon founder and CEO Andrew Mason this summer in Vancouver, where I asked him specifically about Google’s interest (actually, I suggested he mug Google co-founder Larry Page):

Please see this disclosure related to me and Google.

]]> http://allthingsd.com/20101119/google-turns-its-local-eyes-to-groupon-but-who-else-could-enter-bidding/feed/ 16 http://allthingsd.com/20101117/kayaks-ipo-filing-we-dont-depend-on-search-engines/ http://allthingsd.com/20101117/kayaks-ipo-filing-we-dont-depend-on-search-engines/#comments Wed, 17 Nov 2010 16:48:05 +0000 Liz Gannes http://networkeffect.allthingsd.com/?p=482 Travel search provider Kayak today filed with the SEC for an IPO worth $50 million, with no price per share specified. But it did specify a bunch of stuff about its business in its S-1.

The Kayak iPad app

Kayak had revenue of $128 million for net income of $6.2 million through Sept. 30 of this year, up from $86.6 million in revenue and net income of $10.4 million last year. The company significantly increased its marketing spending in that period to $69.1 million from $36.0 million. It has been profitable since 2008.

Kayak is in a bit of a precarious position, since it licenses fare information from ITA Software, which Google has agreed to buy. This is a significant expense; Kayak said in the filing it expects to pay ITA $21 million from the beginning of 2010 to the end of 2012. The company admitted that Google messing with ITA could have a “significant negative effect” on its business.

However, Kayak sought to declare its independence from search, saying very little of its traffic comes from Google and the like. The company contended this is because its users are loyal to its brand. So far this year, 72 percent of Kayak queries came from direct visitors to its site, 15 percent from advertising and only eight percent from users referred by search engines. Kayak had 469 million user queries through Sept. 30, with year-over-year growth of 37 percent.

Kayak also has a contract to show Google ads. The filing reports that 15 percent of Kayak advertising revenue so far this year has come from Google, and eight percent of total revenue (the other source of Kayak revenues is referrals).

Kayak is trying to push itself as a mobile growth story, with four million downloads of its mobile apps so far. The company had joked earlier this month that it was putting out its own phone (riffing on rumors of a “Facebook phone”) called the KPHONE and including features like an “actual igniting signal flare” and automatically dialing of your mom every 15 minutes “because you are a terrible person and seriously you never call.” Obviously that sense of humor doesn’t come through in the S-1.

]]> http://allthingsd.com/20101117/kayaks-ipo-filing-we-dont-depend-on-search-engines/feed/ 0 http://allthingsd.com/20101026/travel-sites-ally-to-block-google-deal/ http://allthingsd.com/20101026/travel-sites-ally-to-block-google-deal/#comments Tue, 26 Oct 2010 07:00:29 +0000 Thomas Catan http://voices.allthingsd.com/?p=31541 Several popular online travel companies are joining forces to oppose Google Inc.’s proposed $700 million purchase of ITA Software Inc., the leading provider of flight data, saying the deal would give it too much sway over the travel sector.

Expedia Inc., Kayak.com, Sabre Holdings and Farelogix Inc.—which operate half-a-dozen leading online travel sites—are forming a coalition called FairSearch.org to persuade the Justice Department to block Google’s latest deal.

The companies are also launching a lobbying blitz on Capitol Hill, making the case to members of Congress that the deal would allow Google to dominate the online air-travel market by giving it control over the software that powers many of its rivals in the travel search business.
Google responds that buying the service will help it provide more useful information to consumers when they search for flight data.

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]]> http://allthingsd.com/20101026/travel-sites-ally-to-block-google-deal/feed/ 0 http://allthingsd.com/20100701/google-lands-flight-information-provider-ita-for-700-million/ http://allthingsd.com/20100701/google-lands-flight-information-provider-ita-for-700-million/#comments Thu, 01 Jul 2010 20:29:01 +0000 Voices http://voices.allthingsd.com/?p=26773 With the aim of becoming a go-to destination for travelers who want to compare flights and airfares, Google is buying ITA Software, a Cambridge, Mass., flight information software company, for $700 million. The search giant will use the technology to serve as a middleman, “creating new flight search tools that will make it easier for you to search for flights, compare flight options and prices and get you quickly to a site where you can buy your ticket,” according to VP Marissa Mayer.

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